How does financial crisis influence the bank of China?

Due to the subprime crisis in USA in 2008, the financial crisis is sweeping way cross the world. However, it does not destroy everything, for the banks act as an important role in the financial institutions in each country. China is a country which has been developing rapidly. It has its own political system and hence there is different financial system. That is why the bank of China have to recognized about the reason of this financial crisis so that to find the way to solve the problem which correspond to China.

 At present, the direct impact to the bank of China includes the bond holding, the commercial loans, although those can be controlled. And the bank of China can not ignore the risk of providing the loan to the real estate. Retail banking business may also exert the negative impact.

 The Chinese government takes measure to prevent economic slowdown which can affect the average profit level on the bank of China. The detail is as following. From long term, the sustaining economics development of China depends on the adjustment of its economic structure. The guidance to the fund flow by the banking plays the vital role. In the next place, as the result of lacking the completely social security in China, the Chinese citizen would be anxious to the economic slowdown, hence, there is a large restrain on residents’ consumption and investment willing. The consumer banking business which dominates the housing mortgage loan is facing the risk of going downhill. On the third point, the most important task the Chinese commercial bank will meet is how to take advantage of minimizing the interest rate spreads. The basic idea is that the payoff space of the banks shrinks due to the reduced margin between deposit and loan rate which is the major resource of the profit of the bank.

  Overall, the bank of China has to find the proper way which fit its own financial institution and development direction during this financial crisis.